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Is Crowdfunding the Future of Investing?

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Is Crowdfunding the Future of Investing?

By Startup Valley (448 words)
Posted in Investors on July 12, 2013

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In a world where funding for a new idea or business can be difficult to obtain, the concept and popularity of crowdfunding is appealing to many. It is a method that allows nearly anyone to raise startup capital for their next business venture. Instead of seeking out a loan from banks or traditional investors, you are able to pitch your ideas over the Internet in order to attract investors.

The easier it is for a prospective business owner to obtain startup funds, the more the economy can benefit from the experience that is crowdfunding. Many entrepreneurs have built a wide variety of marketable businesses through the use of crowdfunding. The benefits to a society that looks to crowdfunding as a means of launching or growing their business include:

  • Economical Growth - Depending on the type of business that is considered, you could wind up hiring quite a few individuals as staff. This could help decrease the unemployment rate for your community and provide others with the means to sustain themselves.

  • Easier to Obtain - As long as your pitch has validity, acquiring funding through the use of crowdfunding portals can allow potential investors to become familiar with your company. Startup businesses don't have to jump through the proverbial hoops that banks enforce on recipients of a simple business loan.

Originally, many crowdfunding sources allowed startups to offer "rewards" to investors in terms of products and/or services that are developed by the business. However, the interest grew to the point to where organizations could develop an equity model, though an equity crowdfunding platform, to help secure funds. Essentially, these investors now own an equitable stake of the company as they would any other investment opportunity. Due to this development, the Securities and Exchange Commission has to be involved in order to maintain such activities.

As technology continues to advance, many individuals are developing a great deal of innovative concepts that could improve how people participate in day-to-day activities. Unlike the "dot-com bubble" pop near the beginning of the 21st century, technology has been more stable and continuing to be a worthwhile investment for an array of businesses. A Crowdfunding source prevents innovative developers from disappearing into the "crowd" never to realize his or her potential. How often have you heard the words, "that was my idea" when sitting with your friends watching television? His or her idea could become a reality before someone else takes credit.

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